exv10w5






Exhibit 10.5




PIONEER DRILLING COMPANY




AMENDED AND RESTATED

2007 INCENTIVE PLAN

(Adopted May 16, 2008)




     1. Plan. This 2007 Incentive Plan of Pioneer Drilling Company (this “Plan”) was adopted by
Pioneer Drilling Company, a Texas corporation (the “Company”), to reward certain corporate
officers, key employees, consultants and directors of the Company or its Subsidiaries by enabling
them to acquire shares of common stock of the Company and/or through the provision of cash
payments.



     2. Objectives. This Plan is designed to attract and retain officers, key employees and
consultants of the Company and its Subsidiaries, to attract and retain qualified directors of the
Company, to encourage the sense of proprietorship of such officers, employees, consultants and
directors and to stimulate the active interest of such persons in the development and financial
success of the Company and its Subsidiaries. These objectives are to be accomplished by making
Awards under this Plan and thereby providing Participants with a proprietary interest in the growth
and performance of the Company and its Subsidiaries.



     3. Definitions. As used herein, the terms set forth below shall have the following respective
meanings:



     “Authorized Officer” means the Chairman of the Board or the Chief Executive Officer of the
Company (or any other senior officer of the Company to whom either of them shall delegate the
authority to execute any Award Agreement).



     “Award” means the grant of any Option, SAR, Stock Award, Performance Award or Cash Award,
whether granted singly, in combination or in tandem, to a Participant pursuant to such applicable
terms, conditions and limitations as the Committee may establish in accordance with the objectives
of the Plan.



     “Award Agreement” means any written agreement between the Company and a Participant setting
forth the terms, conditions and limitations applicable to an Award.



     “Board” means the Board of Directors of the Company.



     “Cash Award” means an award denominated in cash.



     “Code” means the Internal Revenue Code of 1986, as amended from time to time.



     “Committee” means the Compensation Committee of the Board or such other committee of the Board
as may be designated by the Board to administer the Plan.



     “Common Stock” means the Common Stock, par value $0.10 per share, of the Company.



 









 





     “Director” means an individual serving as a member of the Board.



     “Dividend Equivalents” means, with respect to shares of Restricted Stock or Restricted Stock
Units, with respect to which shares are to be issued at the end of the Restriction Period, an
amount equal to all dividends and other distributions (or the economic equivalent thereof) that are
payable to shareholders of record during the Restriction Period on a like number of shares of
Common Stock.



     “Employee” means an employee of the Company or any of its Subsidiaries and an individual who
has agreed to become an employee of the Company or any of its Subsidiaries and actually becomes
such an employee within the following six months.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     “Fair Market Value” of a share of Common Stock means, as of a particular date, (i) if shares
of Common Stock are listed on a national securities exchange, the closing sales price per share of
Common Stock on the consolidated transaction reporting system for the principal national securities
exchange on which shares of Common Stock are listed on that date, or, if there shall have been no
such sales reported on that date, on the last preceding date on which such a sale was so reported,
(ii) if the Common Stock is not so listed, the mean between the closing bid and asked price on that
date, or, if there are no such prices available for such date, on the last preceding date on which
such prices shall be available, as reported by the National Quotation Bureau Incorporated, or (iii)
if shares of Common Stock are not publicly traded, the most recent value determined by an
independent appraiser appointed by the Company for such purpose.



     “Incentive Option” means an Option that is intended to comply with the requirements set forth
in Section 422 of the Code.



     “Option” means a right to purchase a specified number of shares of Common Stock at a specified
price.



     “Nonqualified Option” means an Option that is not intended to comply with the requirements set
forth in Section 422 of the Code.



     “Participant” means an Employee, consultant or Director to whom an Award has been made under
this Plan.



     “Performance Award” means an award made pursuant to this Plan to a Participant who is an
Employee, which Award is subject to the attainment of one or more Performance Goals. Performance
Awards may be Stock Awards or Cash Awards.



     “Performance Goal” means a standard established by the Committee, to determine in whole or in
part whether a Performance Award shall be earned.



     “Restricted Stock” means any Common Stock that is restricted or subject to forfeiture
provisions.



-2-









 





     “Restricted Stock Unit” means a unit evidencing the right to receive one share of Common Stock
or equivalent value (as determined by the Committee) that is restricted or subject to forfeiture
provisions.



     “Restriction Period” means a period of time beginning as of the date upon which an Award of
Restricted Stock or Restricted Stock Units is made pursuant to this Plan and ending as of the date
upon which the Common Stock subject to such Award is issued (if not previously issued), no longer
restricted or subject to forfeiture provisions.



     “SAR” means a right to receive a payment, in cash or Common Stock, equal to the excess of the
Fair Market Value or other specified valuation of a specified number of shares of Common Stock on
the date the right is exercised over a specified strike price, in each case, as determined by the
Committee.



     “Stock Award” means an award in the form of shares of Common Stock or units denominated in
shares of Common Stock.



     “Subsidiary” means (i) in the case of a corporation, any corporation of which the Company
directly or indirectly owns shares representing 50% or more of the combined voting power of the
shares of all classes or series of capital stock of such corporation which have the right to vote
generally on matters submitted to a vote of the shareholders of such corporation and (ii) in the
case of a partnership or other business entity not organized as a corporation, any such business
entity of which the Company directly or indirectly owns 50% or more of the voting, capital or
profits interests (whether in the form of partnership interests, membership interests or
otherwise).



     4. Eligibility.




     (a) Employees. Employees eligible for Awards under this Plan are: (i) the officers of
the Company; and (ii) those other employees who hold positions of responsibility and whose
performance, in the judgment of the Committee, can have a significant effect on the success
of the Company and its Subsidiaries.




     (b) Consultants. Consultants eligible for Awards under this Plan are those consultants
to the Company or Subsidiaries whose performance, in the judgment of the Committee, can have
or have had a significant effect on the success of the Company and its Subsidiaries.




     (c) Directors. Directors eligible for Awards under this Plan, in their capacities as
Directors, are those who are not employees of the Company or any of its Subsidiaries
(“Nonemployee Directors”).



     5. Common Stock Available for Awards. Subject to the provisions of paragraph 15 hereof, there
shall be available for Awards under this Plan granted wholly or partly in Common Stock (including
rights or options that may be exercised for or settled in Common Stock) an aggregate of 3,000,000
shares of Common Stock. In the discretion of the Committee, all 3,000,000 shares of Common Stock
may be granted as Incentive Options. No more than 1,000,000 shares of Common Stock shall be
available under this Plan for Awards other than



-3-









 







Options or SARs. Additionally, the number of shares of Common Stock that are the subject of
Awards under this Plan, that are cancelled, forfeited, terminated or expire unexercised, shall
again immediately become available for Awards hereunder. The number of shares reserved for
issuance under the Plan shall be reduced only to the extent that shares of Common Stock are
actually issued in connection with the exercise or settlement of an Award; provided, however, that
the number of shares reserved for issuance shall be reduced by the total number of Options or SARs
exercised. The number of shares reserved for issuance under the Plan shall not be increased by (i)
any shares tendered or Award surrendered in connection with the purchase of shares upon the
exercise of an Option as described in paragraph 11 or (ii) any shares deducted from an Award
payment in connection with the Company’s tax withholding obligations as described in paragraph 12.
The Committee may from time to time adopt and observe such procedures concerning the counting of
shares against the Plan maximum as it may deem appropriate. The Committee and the appropriate
officers of the Company shall be authorized to, from time to time, take all such actions as any of
them may determine are necessary or appropriate to file any documents with governmental
authorities, stock exchanges and transaction reporting systems as may be required to ensure that
shares of Common Stock are available for issuance pursuant to Awards.



     6. Administration.




     (a) Authority of the Committee. This Plan shall be administered by the Committee.
Subject to the provisions hereof, the Committee shall have full and exclusive power and
authority to administer this Plan and to take all actions that are specifically contemplated
hereby or are necessary or appropriate in connection with the administration hereof. The
Committee shall also have full and exclusive power to interpret this Plan and to adopt such
rules, regulations and guidelines for carrying out this Plan as it may deem necessary or
proper, all of which powers shall be exercised in the best interests of the Company and in
keeping with the objectives of this Plan. Subject to paragraph 6(c) hereof, the Committee
may, in its discretion, provide for the extension of the exercisability of an Award,
accelerate the vesting or exercisability of an Award, eliminate or make less restrictive any
restrictions contained in an Award, waive any restriction or other provision of this Plan or
an Award or otherwise amend or modify an Award in any manner that is (i) not adverse to the
Participant to whom such Award was granted, (ii) consented to by such Participant or
(iii) authorized by paragraph 15(c) hereof; provided, however, that no such action shall
permit the term of any Option to be greater than ten years from the applicable grant date.
The Committee may make an Award to an individual who it expects to become an employee of the
Company or any of its Subsidiaries within the next six months, with such Award being subject
to the individual’s actually becoming an employee within such time period, and subject to
such other terms and conditions as may be established by the Committee. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in this Plan or in
any Award in the manner and to the extent the Committee deems necessary or desirable to
further the Plan purposes. Any decision of the Committee in the interpretation and
administration of this Plan shall lie within its sole and absolute discretion and shall be
final, conclusive and binding on all parties concerned.



-4-









 






     (b) Limitation of Liability. No member of the Committee or officer of the Company to
whom the Committee has delegated authority in accordance with the provisions of paragraph 7
of this Plan shall be liable for anything done or omitted to be done by him or her, by any
member of the Committee or by any officer of the Company in connection with the performance
of any duties under this Plan, except for his or her own willful misconduct or as expressly
provided by statute.




     (c) Repricing and Other Limitations. No Award may be repriced, replaced, regranted
through cancellation or modified without shareholder approval (except in connection with a
change in the Company’s capitalization), if the effect would be to reduce the exercise price
for the shares underlying such Award. No Award may be modified or extended in a manner that
would cause the Award to be subject to, or result in a violation of, Section 409A of the
Code.



     7. Delegation of Authority. The Committee may delegate to the Chief Executive Officer and to
other senior officers of the Company its duties under this Plan pursuant to such conditions or
limitations as the Committee may establish.



     8. Awards. (a) The Committee shall determine the type or types of Awards to be made under
this Plan and shall designate from time to time the Participants who are to be the recipients of
such Awards. Each Award shall be embodied in an Award Agreement, which shall contain such terms,
conditions and limitations as shall be determined by the Committee in its sole discretion and shall
be signed by the Participant to whom the Award is made and by an Authorized Officer for and on
behalf of the Company. Awards may consist of those listed in this paragraph 8(a) and may be
granted singly, in combination or in tandem. Awards may also be made in combination or in tandem
with, in replacement of, or as alternatives to, grants or rights under this Plan or any other plan
of the Company or any of its Subsidiaries, including the plan of any acquired entity; provided
that, except as contemplated in paragraph 15 hereof, no Option may be issued in exchange for the
cancellation of an Option with a higher exercise price nor may the exercise price of any Option be
reduced. All or part of an Award may be subject to conditions established by the Committee, which
may include, but are not limited to, continuous service with the Company and its Subsidiaries,
achievement of specific business objectives, increases in specified indices, attainment of
specified growth rates and other comparable measurements of performance. Upon the termination of
employment by a Participant who is an Employee, any unexercised, deferred, unvested or unpaid
Awards shall be treated as set forth in the applicable Award Agreement.




     (i) Option. An Award may be in the form of an Option. An Option awarded pursuant to
this Plan may consist of an Incentive Option or a Nonqualified Option. Incentive Options
may not be awarded to Nonemployee Directors. The price at which shares of Common Stock may
be purchased upon the exercise of an Option shall be not less than the Fair Market Value of
the Common Stock on the date of grant. The term of an Option shall not exceed ten years
from the date of grant. Subject to the foregoing provisions, the terms, conditions and
limitations applicable to any Options awarded pursuant to this Plan, including the term of
any Options and the date or dates upon which they become exercisable, shall be determined by
the Committee.



-5-









 






     (ii) Stock Appreciation Right. An Award may be in the form of an SAR. The strike
price for an SAR shall not be less than the Fair Market Value of the Common Stock on the
date on which the SAR is granted. The term of an SAR shall not exceed ten years from the
date of grant. Subject to the foregoing limitations, the terms, conditions and limitations
applicable to any SARs awarded pursuant to this Plan, including the term of any SARs and the
date or dates upon which they become exercisable, shall be determined by the Committee.




     (iii) Stock Award. An Award may be in the form of a Stock Award. Subject to the Plan,
the vesting and other terms, conditions and limitations applicable to any Stock Awards
granted pursuant to this Plan shall be determined by the Committee, acting in its
discretion.




     (iv) Cash Award. An Award may be in the form of a Cash Award. The terms, conditions
and limitations applicable to any Cash Awards granted pursuant to this Plan shall be
determined by the Committee.




     (v) Performance Award. Without limiting the type or number of Awards that may be made
under the other provisions of this Plan, an Award may be in the form of a Performance Award.
Subject to the Plan, the terms, conditions and limitations applicable to any Performance
Awards granted to Participants pursuant to this Plan shall be determined by the Committee,
acting in its discretion. The Committee shall set Performance Goals in its discretion
which, depending on the extent to which they are met, will determine the value and/or amount
of Performance Awards that will be paid out to the Participant and/or the portion of an
Award that may be exercised.




          (A) Nonqualified Performance Awards. Performance Awards granted to Employees or
Nonemployee Directors that are not intended to qualify as qualified performance-based
compensation under Section 162(m) of the Code shall be based on achievement of such
Performance Goals and be subject to such terms, conditions and restrictions as the Committee
or its delegate shall determine.




          (B) Qualified Performance Awards. Performance Awards granted to Employees under the
Plan that are intended to qualify as qualified performance-based compensation under Section
162(m) of the Code shall be paid, vested or otherwise deliverable solely on account of the
attainment of one or more pre-established, objective Performance Goals established by the
Committee in accordance with Section 162(m) of the Code prior to the earlier to occur of
(x) 90 days after the commencement of the period of service to which the Performance Goal
relates and (y) the lapse of 25% of the period of service (as scheduled in good faith at the
time the goal is established), and in any event while the outcome is substantially
uncertain. A Performance Goal is objective if a third party having knowledge of the
relevant facts could determine whether the goal is met. Such a Performance Goal may be
based on one or more business criteria that apply to the Employee, one or more business
units, divisions or sectors of the Company, or the Company as a whole, and if so desired by
the Committee, by comparison with a peer group of companies. A Performance Goal may include
one or more of the following:



-6-









 






	 	•	 	increased revenue;
	 
	 	•	 	net income measures (including but not limited to income after
capital costs and income before or after taxes);
	 
	 	•	 	stock price measures (including but not limited to growth measures
and total shareholder return);
	 
	 	•	 	price per share of Common Stock;
	 
	 	•	 	market share;
	 
	 	•	 	net earnings;
	 
	 	•	 	earnings per share (actual or targeted growth);
	 
	 	•	 	earnings before interest, taxes, depreciation, and amortization
(“EBITDA”);
	 
	 	•	 	earnings before interest, taxes and amortization (“EBITA”);
	 
	 	•	 	economic value added (or an equivalent metric);
	 
	 	•	 	market value added;
	 
	 	•	 	debt to equity ratio;
	 
	 	•	 	cash flow measures (including but not limited to cash flow per
share, cash flow return on capital, cash flow return on tangible
capital, net cash flow, net cash flow before financing activities and
improvement in or attainment of working capital levels);
	 
	 	•	 	return measures (including but not limited to return on equity,
return on average assets, return on capital, risk-adjusted return on
capital, return on investors’ capital and return on average equity);
	 
	 	•	 	operating measures (including operating income, funds from
operations, cash from operations, after-tax operating income; net
operating profit after tax, revenue volumes, operating efficiency, rig
fleet day rates and rig fleet utilization);
	 
	 	•	 	expense measures (including but not limited to overhead cost,
general and administrative expense and improvement in or attainment of
expense levels);
	 
	 	•	 	margins;
	 
	 	•	 	shareholder value;




-7-









 






	 	•	 	proceeds from dispositions;
	 
	 	•	 	total market value;
	 
	 	•	 	reliability;
	 
	 	•	 	productivity;
	 
	 	•	 	corporate values measures (including ethics compliance,
environmental, and safety) and
	 
	 	•	 	debt reduction.






Unless otherwise stated, such a Performance Goal need not be based upon an
increase or positive result under a particular business criterion and could
include, for example, maintaining the status quo, performance relative to a
peer group determined by the Committee or limiting economic losses
(measured, in each case, by reference to specific business criteria). In
interpreting Plan provisions applicable to Performance Goals and Qualified
Performance Awards, it is the intent of the Plan to conform with the
standards of Section 162(m) of the Code and Treasury Regulation
§1.162-27(e)(2)(i), as to grants to those Employees whose compensation is,
or is likely to be, subject to Section 162(m) of the Code, and the Committee
in establishing such goals and interpreting the Plan shall be guided by such
provisions. Prior to the payment of any compensation based on the
achievement of Performance Goals applicable to Qualified Performance Awards,
the Committee must certify in writing that applicable Performance Goals and
any of the material terms thereof were, in fact, satisfied. Subject to the
foregoing provisions, the terms, conditions and limitations applicable to
any Qualified Performance Awards made pursuant to this Plan shall be
determined by the Committee.




     (b) Notwithstanding anything to the contrary contained in this Plan, the following
limitations shall apply to any Awards made hereunder:




     (i) no Participant may be granted, during any one-year period, Awards
consisting of Options or SARs that are exercisable for more than 400,000 shares of
Common Stock;




     (ii) no Participant may be granted, during any one-year period, Stock Awards
covering or relating to more than 200,000 shares of Common Stock (the limitation set
forth in this clause (ii), together with the limitation set forth in clause (i)
above, being hereinafter collectively referred to as the “Stock-based Awards
Limitations”); and




     (iii) no Participant may be granted Awards consisting of cash or in any other
form permitted under this Plan (other than Awards consisting of Options or



-8-









 







SARs or otherwise consisting of shares of Common Stock or units denominated in
such shares) in respect of any one-year period having a value determined on the date
of grant in excess of $3,000,000.



     9. (Intentionally left blank.)



     10. Award Payment; Dividends; Substitution.




     (a) General. Payment of Awards may be made in the form of cash or Common Stock, or a
combination thereof, and may include such restrictions as the Committee shall determine,
including, in the case of Common Stock, restrictions on transfer and forfeiture provisions.
If payment of an Award is made in the form of Restricted Stock, the applicable Award
Agreement relating to such shares shall specify whether they are to be issued at the
beginning or end of the Restriction Period. In the event that shares of Restricted Stock
are to be issued at the beginning of the Restriction Period, the certificates evidencing
such shares (to the extent that such shares are so evidenced) shall contain appropriate
legends and restrictions that describe the terms and conditions of the restrictions
applicable thereto. In the event that shares of Restricted Stock are to be issued at the
end of the Restricted Period, the right to receive such shares shall be evidenced by book
entry registration or in such other manner as the Committee may determine.




     (b) Deferral. With the approval of the Committee, amounts payable in respect of Awards
may be deferred and paid either in the form of installments or as a lump-sum payment;
provided, however, that if deferral is permitted, each provision of the Award shall be
interpreted to permit the deferral only as allowed in compliance with the requirements of
Section 409A of the Code and any provision that would conflict with such requirements shall
not be valid or enforceable. The Committee intends that any Awards under the Plan satisfy
the applicable requirements of Section 409A of the Code to avoid imposition of applicable
taxes thereunder. The Committee may permit selected Participants to elect to defer payments
of some or all types of Awards in accordance with procedures established by the Committee.
Any deferred payment of an Award, whether elected by the Participant or specified by the
Award Agreement or by the Committee, may be forfeited if and to the extent that the Award
Agreement so provides.




     (c) Dividends and Interest. Rights to dividends or Dividend Equivalents may be
extended to and made part of any Award consisting of shares of Common Stock or units
denominated in shares of Common Stock, subject to such terms, conditions and restrictions as
the Committee may establish. The Committee may also establish rules and procedures for the
crediting of interest on deferred cash payments and Dividend Equivalents for Awards
consisting of shares of Common Stock or units denominated in shares of Common Stock.



     11. Stock Option Exercise. The price at which shares of Common Stock may be purchased under
an Option shall be paid in full at the time of exercise in cash or, if permitted by the Committee,
the Participant may purchase such shares by means of tendering Common Stock valued at Fair Market
Value on the date of exercise, or any combination thereof. The Committee



-9-









 







shall determine acceptable methods for Participants to tender Common Stock; provided that any
Common Stock that was the subject of an Award may be so tendered only if it has been held by the
Participant for at least six months. The Committee may provide for procedures to permit the
exercise or purchase of such Awards by use of the proceeds to be received from the sale of Common
Stock issuable pursuant to an Award.



     12. Taxes. The Company shall have the right to deduct applicable taxes from any Award payment
and withhold, at the time of delivery or vesting of cash or shares of Common Stock under this Plan,
an appropriate amount of cash or number of shares of Common Stock or a combination thereof for
payment of taxes required by law or to take, or cause the Participant to take, such other action as
may be necessary in the opinion of the Company to satisfy all obligations for withholding of such
taxes. The Committee may also permit withholding to be satisfied by the transfer to the Company of
shares of Common Stock theretofore owned by the holder of the Award with respect to which
withholding is required. If shares of Common Stock are used to satisfy tax withholding, such
shares shall be valued based on the Fair Market Value when the tax withholding is required to be
made.



     13. Amendment, Modification, Suspension or Termination. The Board may amend, modify, suspend
or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements
or for any other purpose permitted by law, except that (i) no amendment or alteration that would
adversely affect the rights of any Participant under any Award previously granted to such
Participant shall be made without the consent of such Participant and (ii) no amendment or
alteration shall be effective prior to its approval by the shareholders of the Company to the
extent shareholder approval is otherwise required by applicable legal requirements.



     14. Assignability. Unless otherwise determined by the Committee in the Award Agreement, no
Award or any other benefit under this Plan shall be assignable or otherwise transferable, except
upon the Participant’s death to a beneficiary designated by the Participant in a manner acceptable
to the Committee, or, if no beneficiary has been duly designated or no duly designated beneficiary
shall survive the Participant, pursuant to the Participant’s Will or the laws of descent and
distribution. Any attempted assignment of an Award or any other benefit under this Plan in
violation of this paragraph 14 shall be null and void.



     15. Adjustments.




     (a) The existence of outstanding Awards shall not affect in any manner the right or
power of the Company or its shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the capital stock of the Company or
its business or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock (whether or not such issue is prior to, on a
parity with or junior to the Common Stock) or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any other corporate
act or proceeding of any kind, whether or not of a character similar to that of the acts or
proceedings enumerated above.



-10-









 






     (b) In the event of any subdivision, consolidation of outstanding shares of Common
Stock, declaration of a dividend payable in shares of Common Stock or other stock split, any
other recapitalization or capital reorganization of the Company, any consolidation or merger
of the Company with another corporation or entity, the adoption by the Company of any plan
of exchange affecting the Common Stock or any distribution to holders of Common Stock of
securities or property (other than normal cash dividends or dividends payable in Common
Stock), then (i) the number of shares of Common Stock reserved under this Plan, (ii) the
number of shares of Common Stock covered by outstanding Awards in the form of Common Stock
or units denominated in Common Stock, (iii) the exercise or other price in respect of such
Awards, and (iv) the Stock-based Award Limitations described in paragraph 8(b) hereof shall
each be proportionately adjusted to the extent and in the manner the Board, in its
discretion, deems appropriate or necessary to reflect such transaction; provided that such
adjustments shall only be such as are necessary to maintain the proportionate interest of
the holders of the Awards and preserve, without exceeding, the value of such Awards.




     (c) In the event of a corporate merger, consolidation, sale or other disposition of
stock or assets, acquisition of property or stock, separation, reorganization or
liquidation, the Board may make such adjustments to Awards or other provisions for the
disposition of Awards as it deems equitable, and shall be authorized, in its discretion,
(i) to provide for the substitution of a new Award or other arrangement (which, if
applicable, may be exercisable for such property or stock as the Board determines) for an
Award or the assumption of the Award, regardless of whether in a transaction to which
Section 424(a) of the Code applies, (ii) to provide, prior to the transaction, for the
acceleration of the vesting and exercisability of, or lapse of restrictions with respect to,
the Award and, if the transaction is a cash merger, provide for the termination of any
portion of the Award that remains unexercised at the time of such transaction or (iii) to
provide for the acceleration of the vesting and exercisability of an Award and the
cancellation thereof in exchange for such payment as shall be mutually agreeable to the
Participant and the Board.



     16. Restrictions. No Common Stock or other form of payment shall be issued with respect to
any Award unless the Company shall be satisfied based on the advice of its counsel that such
issuance will be in compliance with applicable federal and state securities laws. Certificates
evidencing shares of Common Stock delivered under this Plan (to the extent that such shares are so
evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other requirements of the Securities and Exchange
Commission, any securities exchange or transaction reporting system upon which the Common Stock is
then listed or to which it is admitted for quotation and any applicable federal or state securities
law. The Committee may cause a legend or legends to be placed upon such certificates (if any) to
make appropriate reference to such restrictions.



     17. Unfunded Plan. Insofar as it provides for Awards of cash, Common Stock or rights thereto,
this Plan shall be unfunded. Although bookkeeping accounts may be established with respect to
Participants who are entitled to cash, Common Stock or rights thereto under this Plan, any such
accounts shall be used merely as a bookkeeping convenience. The Company shall not be required to
segregate any assets that may at any time be represented by cash,



-11-









 







Common Stock or rights thereto, nor shall this Plan be construed as providing for such
segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee of any
cash, Common Stock or rights thereto to be granted under this Plan. Any liability or obligation of
the Company to any Participant with respect to an Award of cash, Common Stock or rights thereto
under this Plan shall be based solely upon any contractual obligations that may be created by this
Plan and any Award Agreement, and no such liability or obligation of the Company shall be deemed to
be secured by any pledge or other encumbrance on any property of the Company. Neither the Company
nor the Board nor the Committee shall be required to give any security or bond for the performance
of any obligation that may be created by this Plan.



     18. Section 409A of the Code. Notwithstanding anything in this Plan to the contrary, if any
Plan provision or Award under the Plan would result in the imposition of an applicable tax under
Section 409A of the Code and related regulations and Treasury pronouncements, that Plan provision
or Award will be reformed to avoid imposition of the applicable tax and no such action shall be
deemed to adversely affect the Participant’s rights to an Award.



     19. Governing Law. This Plan and all determinations made and actions taken pursuant hereto,
to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of
the United States, shall be governed by and construed in accordance with the laws of the State of
Texas.



     20. No Right to Employment or Directorship. Nothing in the Plan or an Award Agreement shall
interfere with or limit in any way the right of the Company or a Subsidiary to terminate any
Participant’s employment or other service relationship at any time, nor confer upon any Participant
any right to continue in the capacity in which he or she is employed or otherwise serves the
Company or any Subsidiary. Further, nothing in the Plan or an Award Agreement constitutes any
assurance or obligation of the Board to nominate any Director for re-election by the Company’s
shareholders.



     21. Successors. All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company.



     22. Effectiveness. This Plan shall be effective upon the approval by the holders of a
majority of shares of votes entitled to vote on the approval of this Plan and who vote for or
against or expressly abstain from voting with respect to the approval of this Plan at the 2007
annual meeting of the Company’s shareholders to be held on August 3, 2007 or any adjournment or
postponement thereof. If the shareholders of the Company should fail to so approve this Plan prior
to such date, this Plan shall terminate and cease to be of any further force or effect, and all
grants of Awards hereunder shall be null and void. Notwithstanding the foregoing, the Plan shall
continue in effect for a term of ten years after the date on which the shareholders of the Company
approve the Plan, unless sooner terminated by action of the Board.



-12-









 





     IN WITNESS WHEREOF, Pioneer Drilling Company has caused this Plan to be executed by its duly
authorized officer, effective as provided herein.



	 	 	 	 	 
	 	PIONEER DRILLING COMPANY

 	 
	 	By:  	 	 
	 	 	Joyce M. Schuldt 	 
	 	 	Corporate Secretary 	 
	 




-13-